MSCI(US:MSCI)2025-07-22 16:02Financial Data and Key Metrics Changes - MSCI reported revenue growth of over 9% in Q2 2025, adjusted EBITDA growth of over 10%, and adjusted earnings per share growth of almost 15% [7] - Free cash flow exceeded $300 million, with $286 million worth of shares repurchased year-to-date at an average price of $557 per share [7] - Total run rate growth was 11%, driven by record AUM levels in ETF products linked to MSCI indices, and asset-based fee run rate growth was 17% [7][8] Business Line Data and Key Metrics Changes - Subscription run rate growth was double-digit across banks, broker-dealers, wealth managers, hedge funds, and asset owners, with notable growth of 10% in banks and broker-dealers, 12% in hedge funds, and 17% in wealth managers [15][17][20] - The index and asset-based fee franchise was highlighted as a key growth engine, with total equity index ETF AUM linked to MSCI indices surpassing $2 trillion for the first time [9] - Private assets saw a run rate growth of nearly 13%, with significant product launches enhancing capabilities in private capital solutions [10][11] Market Data and Key Metrics Changes - MSCI captured more indexed equity ETF cash flows than any other index provider during the quarter, with total index ETF and non-ETF AUM balances tracking MSCI indices reaching $6 trillion [9] - Equity ETFs linked to MSCI indexes experienced $49 billion of inflows, capturing 29% of all inflows into indexed equity ETFs [26] - Subscription run rate growth for sustainability and climate solutions was 11%, with 18% growth in Europe [29] Company Strategy and Development Direction - MSCI is focused on expanding its capabilities in private assets and enhancing its integrated franchise to create powerful network effects for clients [12][14] - The company is adapting its tools to capture new opportunities in sustainability and climate, despite current cyclical slowdowns [13] - There is a strong emphasis on innovation and developing new solutions for diverse client segments, particularly in the fast money segment [8][43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the rotation of assets from the U.S. market to international markets, which is expected to boost the asset-based fee business [36] - The company anticipates that the current dynamics in the market will persist for the next several quarters, with a focus on maintaining and enhancing retention rates [32][44] - Management acknowledged challenges in the active asset management industry but emphasized the potential for growth in non-active segments and the wealth management sector [42][65] Other Important Information - MSCI's retention rate for private assets remained stable at slightly over 91% [31] - The company is seeing promising growth potential among insurance companies for products supporting index-linked annuities and climate tools [24] - MSCI's guidance remains unchanged across all categories, indicating confidence in its financial model [32] Q&A Session Summary Question: Potential help from asset flows into international markets - Management noted that the rotation of assets from the U.S. to international markets is a significant boost for the asset-based fee business, with $6 trillion of client assets indexed to MSCI indices [36] Question: Accelerating growth in subscription business - Management indicated that to accelerate total subscription run rate, non-active asset managers need to grow faster, and they are focusing on creating new products and enhancing client engagement [42][44] Question: Impact of consolidation on results - Management acknowledged ongoing consolidation trends but expressed confidence that it would not significantly impact forecasts or pipelines [48] Question: Retention rates in analytics and sustainability - Management explained that retention rates can be lumpy and noted elevated cancels from hedge funds and corporate advisors, but overall retention with asset managers remains solid at around 96% [55] Question: Sales environment and outlook - Management characterized the sales environment as consistent with recent quarters, with a healthy pipeline of products and client engagement [60] Question: Demand for custom indexes - Management remains confident in the growth potential for custom indexes, despite slight fluctuations in quarterly numbers [70] Question: Positioning with active ETFs - Management highlighted significant growth opportunities in active ETFs, with ongoing dialogues with active asset managers and a focus on enhancing product offerings [75]